How A PMO May Cause Your Transformation Initiative To Fail

Enterprises have undertaken transformation initiatives for decades, and there is a bevy of books, articles, white papers and consultants that tout how to ensure transformation success. One of the top best practices touted is to use a central Project Management Office (PMO) that takes responsibility for the transformation plan and holds the organization accountable for achieving it. It sounds like a great idea. The problem is it doesn’t work very well.

I’m not saying companies shouldn’t have PMOs. Project Management Offices are known for effectiveness in tracking outcomes, directing resources and investments for the project, documenting decisions and reporting. But they’re not known for orchestrating change. In fact, the track record of PMOs for successfully driving and achieving change in a complex transformation initiative is very low. In transformations where change impacts multiple parts of the company, having a PMO manage the initiative carries a high risk of failure.

Let’s take the case of a retail organization facing the threat of new competitors. The company decides it needs to make changes to its supply chain processes so that it can become a more demand-driven organization in addressing customers’ expectations. It wants to implement a cloud solution for collaborative supply planning, real-time visibility into supplies and enabling purchasing of raw materials earlier. Also on the agenda is changing multiple business processes to allow sharing forecasts with suppliers prior to ordering. It also includes reducing the time spent connecting with trading partners in multiple global geographies to enhance potential collaborative cross-marketing. Think of the many parts of the enterprise that are involved in the transformational change: purchasing, finance, legal, IT, marketing, sales, merchandising and product development, just to name a few. The retailer brings all of these siloed departments together at the outset to share information and plan how to work together to achieve the objectives.

Or consider the case of a healthcare payer wanting to develop a new digital insurance platform. The claims processing group brings forward its needs for the digital platform. The sales team and accounting team also bring forward their needs that must be addressed in the platform. All of these divisions or stakeholder groups are involved in fleshing out the idea for developing the platform.

In both cases, many different parts of the organizations have been contributing their vision as to what needs to happen. The typical next step is that they develop a transformation plan and give it to a central PMO group. But with that one action, they take away from what has been done. The PMO brings its own team in and starts telling people how they should do their business – the people who developed the idea in the first place.

So, no matter how good the PMO group is, the transformation initiative loses the knowledge and context. Even worse, it loses organizational commitment to follow through and the ability to adjust the design. The result is constraints and obstacles and possibly alienation of the teams involved before the PMO steps in.

A Better Approach

Instead of a PMO focusing on accountability, a much better approach is to have the PMO take on the role of a coach and as a companion to the different component groups involved. This approach keeps the stakeholders involved and keeps them looking for ways to provide both resources and assistance for the project. It also keeps them looking for integration obstacles across the different lines of work and how to combat those obstacles.

My advice, based on my observation of many transformation initiatives is that in a complex transformation, it’s a significant risk to vest too much accountability and trust in a PMO to manage a transformation to succeed.

Because the PMO supersedes the original stakeholder team that developed the idea for change, many plans for driving the change can be lost. The result? The initiative may need to be reworked several times, increasing the time to value and wasting energy, and risking buy-in. The enterprise may complete the initiative or project as it was defined up front; but it’s not likely to get the benefits from it that would result if the original participants remain involved in managing the change.